Finding Text
Significant Deficiencies
2024-002. Payroll (Improper Payments)
United States Department of Education, Passed-through New York State Department of Education:
Education Stabilization Funds
COVID 19: American Rescue Plan – Elementary and
Secondary School Emergency Relief ALN: 84.425U
Criteria: Payments charged to Federal awards must comply with 2 CFR §200.1 (Improper Payments), which defines an improper payment as any payment that should not have been made or was made in an incorrect amount. This includes duplicate salary payments, which are unallowable under federal guidelines. Salaries and wages must be accurately recorded and allocated to prevent overpayments or redundant charges to federal programs.
Condition: During the current year, the audit identified instances of duplicate salary payments being charged to Federal awards. These payments resulted in certain employees being charged to multiple grants for federal reimbursement. Our audit review revealed that payroll records, including transactions where employees’ salaries were recorded more than once, leading to noncompliance with 2 CFR §200.1 regarding improper payments.
Cause: The duplication of salary payments appears to have resulted from errors in payroll review processing and grant allocation. During our audit, we noted the improper payments were caused by the lack of adequate internal controls to verify and reconcile payroll disbursements before grant reimbursement requests were made. Consequently, some of the salary allocations were inadvertently recorded multiple times across different federal programs. See Context below for more specifics.
Effect: Noncompliance with 2 CFR §200.1 may result in disallowed costs and repayment obligations to the Federal government. The presence of duplicate payments charged to grants increases the risk of financial misstatement and potential federal audit findings, which could impact future grant funding.
Questioned Costs: None reported. The identified duplicate salary payments charged to two grants did not meet the $25,000 threshold for reportable questioned costs in accordance with Uniform Guidance.
Context: For the Education Stabilization Funds, based on a sample of nine (9) employees, we noted four (4) of the nine (9) employees were reported on two different federal programs grants for which the District received duplication of federal reimbursement.
Recommendation: The District should enhance its internal payroll controls to identify and prevent duplicate salary payments before submitting reimbursement requests to Federal grants. To prevent duplicate payments, the District should implement periodic reconciliations or review of payroll expenses charged to Federal programs, as well as train payroll personnel and grant managers on compliance with 2 CFR §200.1.
Views of Responsible Officials of Auditee: The District acknowledges the findings and will implement stronger internal controls to ensure that salary payments are accurately recorded and reconciled to prevent duplicate submissions of reimbursement to the federal funding source. In addition, management is in the process of contacting the funding award agency to determine whether reimbursement for the improper payments charged to the grant is necessary.